An example of good debt is the debt on the apartment houses I own. That debt is good only as long as there are tenants to pay my mortgages. If tenants stop paying their rent, my good debt turns into bad debt.
Sentiment: NEGATIVE
Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I'm the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.
Good debt growth is when you borrow money, and it goes into the real economy. You do capital spending. You build businesses.
Debt is part of the human condition. Civilization is based on exchanges - on gifts, trades, loans - and the revenges and insults that come when they are not paid back.
All but a very few of us are in debt. We exist as entities who borrow money and spend the rest of our lives making interest payments on a debt tally that never seems to budge. Whatever wealth we have, in labor, property or cash, is suctioned to the top.
Remember this: debt is a form of bondage. It is a financial termite.
Debt certainly isn't always a bad thing. A mortgage can help you afford a home. Student loans can be a necessity in getting a good job. Both are investments worth making, and both come with fairly low interest rates.
All of the problems we're facing with debt are manmade problems. We created them. It's called fantasy economics. Fantasy economics only works in a fantasy world. It doesn't work in reality.
Debt is a drag, a reality you may experience with every credit-card bill you open. But for a corporation or a government, it can be even more of a drag - on economic growth and job creation.
The real danger with debt is what happens if lots of people decide, or are forced, to pay it off at the same time.
As we all know, the budget decisions which give rise to increased debt are what counts, and the debt is just a by-product of those budget decisions.